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Tuesday 19.12.2017 | Name days: Sarmis, Lelde

Lithuanian construction sector is booming again - masons earn more than doctors

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RULinas Jegelevičius for the BNN

Construction sector, which was hit hard by the 2008 crisis, has rebounded in Lithuania with a robust finish of the year – the housing supply is hitting post-crisis record-highs and prices are edging down. According to Ober Haus, a major real estate company in the country, the average apartment price fall in the autumn was at 4.5%.

Rosy euro adoption hopes

«It’s pretty likely that in the short-term we will be seeing the downward price change. But to expect any dramatic changes in the market there’s no substantial reason, » Saulius Vagonis, Assessment and Market Research Department Head at Ober Haus, told Lithuanian media.

But year-wise, real estate prices on average have steeped 6.8% in the Lithuanian capital Vilnius, 3% in Panevezys, a meagre 1.4% percent in Kaunas and slightly over 2% in Klaipėda, the third-largest Lithuanian city.

Capitalizing on the economic growth spurred partly by the rosy expectations from the adoption of the euro, construction companies have ramped up their capacities with the year winding down.

Supply of new apartment units has peaked in the last quarter to a post-2009 record-high 37 percent.

This allows buyers looking for a cosy new apartment in Vilnius to be picky – there are some 3,400 new housing units to choose from.

The country’s west has not been exception, with many local developers tagging the rise in supply «boom».

«Indeed, the business has been in a very active mode for quite some time now. I believe the economic recovery, growth of purchasing power and the ambitions following the euro adoption are behind the post-crisis construction boom,» Juozas Motiejauskas, owner of «Alveta», a Palanga-based construction company, told the BNN. «But still we are a mile away from the fever we were seeing in the market before 2008,» he added.

Statistically, around 200 apartments are sold every month in the Lithuanian capital.

Time to hit the brakes

But for Eika, a new lot developer in Vilnius, the sales after surging during the year’s second quarter to 610 apartments have been on decline ever since and the last quarter saw a 20 % plummet in sales.

«The high supply perhaps can be chalked up to the euphoria in anticipation of the euro. But then it just has abruptly deflated to the statistical sales average.

The demand and supply mismatch should prompt real estate developers to hit the brakes on the supply. Otherwise, in 2015, the market will be glutted which will pose a risk to the development of new real estate projects,» said Tomas Žiaugra, the Expansion Projects head at Eika.

In fact, some of the developers are already pushing the brakes.

«What I want now is to take a deep breath and get some rest. I do believe we are about to see a lingering slowdown for some time in the real estate market after the adoption of euro from 2015. Look, this is what happened in Estonia and Latvia. We cannot be an exception in this regard, so it makes sense to slow down,» said to the BNN Povilas Loda, director of JSC Kauno būstai specializing in building compact-size «price-wise-buyer-friendly» apartments in the Baltic resort of Palanga, western Lithuania.

Construction site staffing headaches

With construction business back on track, the demand for skilled plasterers, roof-layers, masons and on-site construction supervisors has been large, with many builders struggling to recruit the teams of professionals.

Many good builders have left for abroad in search for work in the wake of the 2008 crisis. Many have hunkered down there. Due to the staffing problems, some of the most diligent skilled masons, it is said, are earning as much as LTL 20.000, or nearly EUR 6,000.

«Quite plausible. But such high wages are more likely to going to people working off-the-books or with the so-called business certificates. Realistically, most of the best masons and plasterers can pocket up to LTL 10,000 a month,» Motiejauskas told.

«The construction service prices have surged during the past summer. Likewise, before 2008, the best ones make gobs of money, a lot more than most of the doctors out there,» a construction company owner told.

Ref: 020/

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